Gold gained for a second straight session on Wednesday after soft retail sales implied some loss of momentum in the U.S. economy, putting pressure on the dollar and curbing speculation that the Federal Reserve may raise interest rates sooner than expected.
The metal remained in a narrow range, however, as signs that tensions in Ukraine and Iraq may be easing underpinned stock markets in Europe and the United States.
for December delivery settled at $1,314.50 an ounce, up $3.90 on the day, but remained within this month's $45 trading range. Meanwhile, spot gold was last up 0.3 percent at $1,312 an ounce.
"We saw a move upwards after the retail sales data, which is now correcting," Commerzbank analyst Daniel Briesemann said. "The weaker dollar helped gold to move up a little bit, but it's still in a narrow trading range."
"Gold is in a very lethargic summer state, moving just a few dollars up and down. We don't see any data coming up, or any other news, which is really going to shake gold out of its trading band."
Retail sales were held back in July by a second straight month of declines in receipts at auto dealers, as well as weak sales of furniture and electronics.
The dollar dipped into negative territory after the numbers, although weakness in the euro kept it underpinned. European shares ticked higher on brighter corporate results, withdrawing some support from assets perceived as safer such as gold.
Bullion investors will continue to monitor U.S. data releases, as the strength of the world's largest economy dictates the pace at which the Federal Reserve tightens monetary policy.
Gold exchange-traded funds - popular investment vehicles which issue securities backed by physical metal - reported inflows on Tuesday, Reuters data showed, suggesting some investor appetite for the metal.
Holdings of the Gold Bullion Securities product operated by London-based ETF Securities said its gold holdings rose by nearly 20,000 ounces on Tuesday.
Demand in major consumer China remained muted. A lack of robust physical demand could make it hard to sustain rallies and may also mean there is little support if prices drop.